Shortly before Christmas, the Facebook-owned social network proposed changing its terms of use so it could exploit members' photographs for profit - without compensating the owners. This prompted a backlash and a rapid volte face by Mark Zuckerberg's Facebook, Instagram's owner. Now we discover that the move has been spectacularly bad for business.

According to app traffic monitoring outfit AppStats, Instagram has lost half of its active users as since the story broke. Daily active users fell from almost 16.3 million to about 7.6 million, stats show.

The number of daily active users is on the slide

Instagram has continued to acquire monthly active users, but this may be a sign of the growing smartphone market and inertia built into the system: monthly users, by definition, post less frequently.

The number of daily users per monthly users

What makes this particularly topical - as we explained here - is that UK internet users are about to be "Instagrammed" on a nuclear scale. But it isn't an internet company that's proposing the photo landgrab - it's the UK government. It's the Conservative/LibDem coalition that wants to "do a Zuckerberg" - and confiscate your property so it can be used for commercial purposes - without your say-so. Measures hastily bundled into the Business and Enterprise Reform Bill would allow entire classes of work to be opted into an "extended collective licensing" scheme where they could be used for commercial exploitation. Since most digital photographs don't have the creator's ID attached in the metadata, they're classified as "orphan works". The UK proposes stripping the international protection on the commercial exploitation of orphan works so large internet companies could use them without risk.

Is there a better way? Perhaps one where commercial or private usage of your photos which you have posted on a social network could see you, the creator, benefit?

Actually, there is - it's the Digital Rights exchange, or "copyright hub" - and it would allow users to deposit their works where others could use them. The government's landgrab is currently being rushed through Parliament to fend off European orphan works law. US photographers' groups have threatened litigation against the UK as millions of US works would be swept into the scheme.

You would have to opt out of an Extended Collective Licensing scheme manually, under current proposals. But it's like being required to register your house on a "Do Not Burgle" Registry. It shouldn't really be necessary. ®